Mt. Gox founder developing new digital currency

Jed McCaleb is taking another shot at entrepreneurship in the cryptocurrency space. The Mt. Gox founder, who sold the exchange in 2011, is trying to improve on Bitcoin’s design with his new project, Ripple.

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Jed McCaleb is taking another shot at entrepreneurship in the cryptocurrency space. The Mt. Gox founder, who sold the exchange in 2011, is trying to improve on Bitcoin’s design with his new project, Ripple.

Ripple is at its core an open-source protocol for a payment network. Ripple has a digital currency called XRP and its own peer-to-peer exchange network. The biggest difference between Ripple and Bitcoin is the way exchanges are handled, via independent gateways that process XRP, dollars, euros and Bitcoins alike.

With such a system operating at a worldwide scale, money could move freely in a matter of seconds at fractions of the costs banks or current money wiring services impose.

The XRP is the base currency in all this, so a BTC-EUR trade would convert into and from XRP to make that trade work. One hundred billion XRPs are in existence, with a total market cap currently set at $1.4 billion. That approaches Bitcoin’s current market cap, albeit with many, many more coins.

The business model is in the coins, specifically the 45 billion coins the company, Ripple Labs, will hold onto. Everything else will be free: The trading, the transfers, all of that.

Despite the fact that one entity could be holding 45% of a currency, the idea has supporters. So far, the company has raised $3 million in funding.

What could be particularly difficult, though, is finding companies that could be the independent gateways (read: “money transmitters” according to state statutes in the US).

McCaleb himself only remains with Ripple Labs now as a board member, but he and two co-founders hold about 20 billion XRPs.